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Edited version of your written advice
Authorisation Number: 1051273528430
Date of advice: 31 August 2017
Ruling
Subject: Contract law: Effect of a contingency clause
Question 1
Can the Commissioner of Taxation confirm that upon activation of a contingency clause the Balance Land would be transferred between the parties for $XXX (excluding GST)?
Answer
Yes.
This ruling applies for the following periods:
N/A
The scheme commences on:
N/A
Relevant facts and circumstances
Upon activation of a contingency clause agreed to between the parties where, if the Project was not completed within the Term (as originally intended by the parties), the Balance Land would be transferred between the parties for $XXX (excluding GST)?
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5
A New Tax System (Goods and Services Tax) Act 1999 Section 9-15
A New Tax System (Goods and Services Tax) Act 1999 Section 195-1
A New Tax System (Goods and Services Tax) Act 1999 Section 9-70
A New Tax System (Goods and Services Tax) Act 1999 Section 9-75
Reasons for decision
As the sale of land contract for the Balance Land is yet to be executed, if both parties enforce the existing contract the Balance Land may be sold for $XXX (excluding GST). However, as stated in the summary, as this private ruling request is based upon a transaction that might occur, it is subject to the conditions stated in Proposition 10 of GSTR 2006/9: Supplies.
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